In Part 2 of the Aprio SALTovation FAQ series, Meredith Smith, Stacey Roberts, and Judy Vorndran discuss some frequently asked questions regarding sales tax noncompliance.
The team shares real examples on compliance issues and also discusses states’ level of authority when/if you fall behind, when to register, and why exemption certificates deserve more attention than they get.
Key Takeaways:
- Washington’s statutory penalty can add up to 39%, and states are moving faster than ever to liens, jeopardy assessments, and frozen bank accounts.
- Physical presence still controls. Trade shows, conferences, traveling sales reps, and inventory can trigger nexus before any economic threshold is crossed.
- Getting a sales tax license is the easy part. The harder questions are who files the returns, who reconciles the accrual, and who monitors ongoing nexus.
- Exemption certificates are not one-size-fits-all. A business license is not a resale certificate, and a 501(c)(3) letter does not automatically exempt a sale.
- Successor liability follows the assets. Sales tax exposure transfers in both stock and asset deals, and undetected liabilities erode purchase price at closing.
- Proactive SALT advice is available. If companies cannot justify a full-time in-house specialist, outside SALT advisors can help companies mitigate risk.